3 Reasons to Repair Your Credit Sooner rather than Later

Waiting to repair your credit does not make good financial sense in a society that operates so heavily on the notion of credit and debt. Fifty years ago, credit was not nearly as important to your financial well-being as it is today. Homes were more affordable, college was downright cheap, and going into debt was more of an option than a necessity. Today, this is not the case. Most large purchases in your life will be made with credit. Preparing yourself as soon as possible is integral to the future of your wealth.

#1 Credit Score is about History

Credit score is not just a measure of your current debts and assets. In fact, your credit score stretches back over your entire loan existence from the first time you swiped plastic. It’s true: some issues have a statute of limitations, like a default or missed payment. But overall, every action you have ever taken that involved debt is there for your next creditor to review. You do not want to wait until a year before you seek a loan to repair everything you need. The creditor will see your score has only recently jumped up, and your progress may not be sustainable. Instead, it is better to show a slow progression into good financial standing, a constantly increasing income and a better financial outlook for tomorrow than for yesterday.

#2 Interest is Costly

You may be able to get a loan with less than perfect credit, but why would you? Borrowers with low credit scores are made to pay thousands of dollars more on the life of most large loans. An interest rate of 6% on your home loan and one of 7% may only depend on 30 points on your credit score. That difference will cost you tens of thousands in the end. Any time you take a loan, you will spend more money to purchase an item than if you bought it outright. But, you can mitigate this expense through positive borrowing behaviors. Start now even if you won't buy a home for years; then, you will not need to stress once the time actually comes to apply.

#3 You Never Know when You'll Need It

Many people think they only need good credit when they are applying for a loan. Good credit is a sign of good character and your score will be used in more areas than you may expect. Landlords consistently check the credit scores of people on rental applications. Employers have complete credit checks for potential employees. Paying your bills on time is a sign that you can pay attention to detail, are forward thinking and manage your necessary responsibilities. You should expect any one who is considering working with you to know your credit score.

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